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DECISION No. 108/2003/QD-TTg OF JUNE 5, 2003 ESTABLISHING CHU LAI OPEN ECONOMIC ZONE, QUANG NAM PROVINCE, AND PROMULGATING ITS OPERATION REGULATION

THE PRIME MINISTER

Pursuant to the Law on Organization of the Government of December 25, 2001;

Pursuant to the conclusions of the Political Bureau in Communiqué No. 79-TB/TW of September 27, 2002;

At the proposal of the Minister of Planning and Investment,

DECIDES:

Article 1.- To establish Chu Lai open economic zone in the territory of Quang Nam province.

Article 2.- To promulgate the Operation Regulation of Chu Lai open economic zone together with this Decision.

Article 3.- This Decision takes effect 15 days after its publication in the Official Gazette.

Article 4.- The Ministers of Planning and Investment; Finance; Defense; Public Security; the Interior; Natural Resources and Environment; Construction; and Trade; the heads of the other ministries, ministerial-level agencies and agencies attached to the Government and the president of the People’s Committee of Quang Nam province shall have to implement this Decision.

Prime Minister
PHAN VAN KHAI

OPERATION REGULATION OF CHU LAI OPEN ECONOMIC ZONE

(Promulgated together with the Prime Minister’s Decision No. 108/2003/QD-TTg of June 5, 2003)

Chapter I

GENERAL PROVISIONS

Article 1.- This Regulation prescribes the operation of Chu Lai open economic zone (hereinafter abbreviated to Chu Lai OEZ).

Article 2.- Chu Lai OEZ is a zone with delimited geographical boundaries within the national territory and under the national sovereignty but having a separate economic space and the most favorable investment and business environment under the current regulations, including socio-technical infrastructures and management policies and mechanisms favorable for business activities and compatible with the market mechanism, aiming to promote investment and export.

Chu Lai OEZ encompasses Nui Thanh district township and the communes of Tam Nghia (excluding Chu Lai airport and a number of locations determined by the People’s Committee of Quang Nam province), Tam Quang, Tam Hai, Tam Giang, Tam Hoa, Tam Hiep, Tam Anh, Tam Tien and Tam Xuan 1 of Nui Thanh district; and Tam Thanh, Tam Phu and Tam Thang communes and An Phu ward of Tam Ky provincial capital, Quang Nam province; with the geographical boundaries delimited by geographical coordinates stretching from 108o26'16" to 108o44'04" East longitude and 15o23'38" to 15o38'43" North latitude:

a/ To the east, it is contiguous to the East Sea;

b/ To the west, it borders on Tam My and Tam Thanh communes, Nui Thanh district, Quang Nam province;

c/ To the south, it borders on Binh Son district, Quang Ngai province;

d/ To the north, it borders on Thang Binh district, Quang Nam province.

Article 3.- Chu Lai OEZ is established for the following purposes:

- Applying new institutions, mechanisms and policies, creating an equal investment and business environment compatible with the international practices, for various forms of business activities of domestic and foreign economic organizations, thereby acquiring more experiences for international and regional economic integration;

- Applying new models and motive forces for economic development and removing obstacles in the current economic management policies and mechanisms, while there have been no conditions yet for their application nationwide;

- Developing production, turning out products of high quality and high competitiveness, stepping export and expansion to the world market;

- Creating jobs and stepping up the training and raising of the quality of human resources;

- Taping the advantages in natural conditions, geographical, economic and political position for international and domestic trade and services in order to boost the socio-economic development of Quang Nam province, thus contributing to creating a motive force for socio-economic development of the whole Central Vietnam and narrowing the development gap between this region and the other regions throughout the country.

Article 4.- The Government of the Socialist Republic of Vietnam encourages and protects Vietnamese organizations and individuals of all economic sectors, overseas Vietnamese and foreign investors that invest and operate in Chu Lai OEZ in the following fields: investment and dealing in infrastructure and urban facilities; industrial development; urban development; commercial, service, tourist, entertainment, finance-banking, transportation, insurance, education and training, healthcare, residential house, goods export and import business; and all other production and business activities according to the provisions of Vietnamese law and international treaties which Vietnam has signed or acceded to.

Article 5.- Vietnamese enterprises of all economic sectors and foreign-invested enterprises in Vietnam, which are established and operate in Chu Lai OEZ, shall be governed by, and enjoy the preferences prescribed in, this Regulation, other provisions of Vietnamese law and international treaties which Vietnam has signed or acceded to.

Article 6.- Apart from the rights they are entitled to according to the Vietnamese law and international treaties which Vietnam has signed or acceded to, enterprises operating in Chu Lai OEZ shall also enjoy the following rights:

1. To use infrastructural works, public facilities and services in common service of Chu Lai OEZ, such as traffic roads, ports, systems of technical infrastructures, lighting, electricity and water supply, information and communications, at prices agreed with enterprises dealing in infrastructures.

2. To enjoy the investment preferences provided for in this Regulation.

3. To transfer the right to use land and assets attached to land within the land lease or sub-lease terms according to the provisions of law, in conformity with the land use purposes of projects already invested. In case of changes in initial investment purposes of projects, the transfer of the right to use land and assets attached to land shall be effected only after it is approved by competent authorities.

4. To mortgage the land use right value and assets attached to land within the land lease or sub-lease terms at credit institutions operating in Vietnam and foreign credit organizations according to the provisions of law.

Article 7.- Chu Lai OEZ shall be developed with the following principal capital sources:

- The State budget capital in support of the construction of important infrastructure works urgently needed for the operation of the OEZ;

- The State’s development investment credit capital;

- Capital of domestic enterprises and population: This source shall be mobilized through direct investment projects and issuance of project bonds or capital partially advanced by subjects that have demands to use infrastructures. To expand the form of co-donors’ credit.

- Foreign capital: To promote to the utmost the attraction of foreign direct investment capital, including the application of investment forms of BOT, BT and BTO; capital of credit institutions, capital of foreign organizations and individuals.

The technical and social infrastructural works of Chu Lai OEZ shall be incorporated in the list of projects calling for ODA capital.

Chapter II

ORGANIZATION OF OPERATION OF CHU LAI OEZ

Article 8.- Chu Lai OEZ includes two areas: the non-tariff area and the tariff area. The size and position of each area shall be determined in the detailed planning of Chu Lai OEZ.

The non-tariff area of Chu Lai OEZ (hereinafter called the non-tariff area for short) is the area determined in the detailed planning as being associated with a section of Ky Ha port (the free port area). The non-tariff area has a solid fence isolating it from the surrounding areas. There shall be no population quarters in the non-tariff area.

The tariff area is the remaining part of Chu Lai OEZ other than the non-tariff area. Located within the tariff area shall be industrial parks, export processing zones, special recreation centers, tourist resorts, population and administrative quarters.

Article 9.- Activities of the non-tariff area associated with the free port area of Ky Ha port include activities of producing export goods and goods in direct service of the area (including processed and recycled goods), trading in goods (including export, import, border-gate shift, temporary import for re-export, distribution, retail department store), commercial and service activities (classification, packing, transport and forwarding of transit goods, preservation, warehousing, post and telecommunications, finance, banking, transportation, insurance, entertainment, recreation, restaurant), trade promotion (product displays, trade fairs and exhibitions; setting up of branches and representative offices of domestic and foreign companies, including financial organizations and banks) and other commercial activities.

Article 10.- The exchange of goods and/or services between the non-tariff area and foreign countries as well as among enterprises within the non-tariff area shall be considered the exchange relationships between foreign countries. Economic organizations operating in the non-tariff area are allowed to export to foreign countries and import from foreign countries all goods and/or services not banned by the Vietnamese law. Goods imported from foreign countries into the non-tariff area or goods exported from the non-tariff area to foreign countries shall be exempted from import tax or export tax.

The duration for storing goods in the non-tariff area is unlimited.

For the free port area of Ky Ha port, foreign ships shall be allowed to enter the port for handling cargoes, without having to go through the entry and exit procedures for persons but only the procedures for ships at buoy zero.

Article 11.- Goods transported into or out of the tariff area of Chu Lai OEZ must comply with the law provisions on goods items, export tax and import tax, but shall enjoy the most favorable customs procedures.

Goods shall be freely circulated between the tariff area and the inland.

Article 12.- The goods exchange between the non-tariff area and the tariff area in Chu Lai OEZ as well as the inland shall be considered the exchange relationship between foreign countries and Vietnam, and must comply with the provisions of the Vietnamese law on management of export goods and import goods.

Individuals and economic organizations in the tariff area and the inland shall only be allowed to import from the non-tariff area goods and services which are not banned by Vietnam from import, and export into the non-tariff area goods and services which are not banned by Vietnam from export.

Goods imported from the non-tariff area into the tariff area and the inland or goods exported from the inland and the tariff area into the non-tariff area shall be subject to import tax or export tax and to the inspection or supervision by border-gate customs offices.

Raw materials, supplies and goods imported by enterprises in the non-tariff area from foreign markets but not used up as well as substandard products of some commercial value shall be allowed to be sold in the domestic market after the customs procedures therefor are completed.

Investment projects for production of export goods and transportation of transit goods shall comply with the general regulations.

Article 13.- Foreign investors are permitted to invest in the provision of international telecommunications services according to the international integration roadmap, which Vietnam has committed to, in exclusive service of Chu Lai OEZ at the charge rates to be decided by investors themselves.

Chapter III

INVESTMENT PREFERENCES

Article 14.-

1. Foreign direct investment projects in Chu Lai OEZ shall be approved according to the process of investment licensing registration. Domestic investment projects shall be considered and approved according to the current regulations with the simplest procedures.

2. All projects on investment in Chu Lai OEZ shall enjoy the maximum preferences applicable to the geographical areas with exceptionally difficult socio-economic conditions under the 1996 Law on Foreign Investment in Vietnam, the 2000 Law Amending and Supplementing a Number of Articles of the Law on Foreign Investment in Vietnam and the 1998 Law on Domestic Investment Promotion (amended) as well as other preferences under the international treaties which Vietnam has signed or acceded to. In cases where different legal documents provide for different preference levels for one domain, the highest preference level shall apply.

Article 15.-

1. Goods and services produced and consumed in the non-tariff area and goods and services imported from foreign countries into the non-tariff area shall not be subject to value added tax.

2. Goods and services brought from the inland into the non-tariff area shall enjoy the value added tax rate of 0%; goods and services brought from the non-tariff area into the tariff area as well as the inland shall be subject to value added tax at the rates prescribed by the current regulations.

3. Goods and services subject to special consumption tax and produced and consumed in the non-tariff area or imported from foreign countries into the non-tariff area shall not be imposed with special consumption tax.

4. Goods and services subject to special consumption tax and brought from the non-tariff area into the tariff area and the inland shall be imposed with special consumption tax.

5. Goods originating from the tariff area and the inland and goods imported from foreign countries into the non-tariff area shall be exempted from import tax.

6. Goods produced, processed, recycled or assembled in the non-tariff area, when being exported to foreign countries, shall be exempted from export tax.

7. For goods produced, processed, recycled or assembled in the non-tariff area with the use of raw materials and components imported from foreign countries, when being imported into Vietnam’s inland, the import tax shall be paid only for the portions of imported raw materials and components contained in such products or goods.

Article 16.- Organizations and individuals that have made merits in mobilizing official development assistance capital or calling for foreign direct investment projects in Chu Lai OEZ shall be rewarded according to the Regulation promulgated by the Chu Lai OEZ Management Board after obtaining the Finance Ministry’s consent.

Article 17.- Domestic enterprises of all economic sectors investing in production and business in Chu Lai OEZ shall be lent the State credit capital by the Development Assistance Fund according to the current regulations.

Article 18.- Vietnamese, overseas Vietnamese, foreigners permanently residing in Vietnam and foreign investors are allowed to invest in building residential houses for sale or lease; invest in the construction of infrastructures for lease or transfer the right to use land within Chu Lai OEZ on which they have built infrastructures. Overseas Vietnamese, foreigners permanently residing in Vietnam and foreign investors are also allowed to purchase residential houses in Chu Lai OEZ.

Article 19.- The policy on single prices of goods, services and land rent shall be applied to all individuals and enterprises, regardless of whether they are domestic or foreign.

Chapter IV

THE LAND USE

Article 20.- The whole land and water surface area already planned for Chu Lai OEZ development investment shall be handed over at one time to the Management Board of Chu Lai OEZ. The Chu Lai OEZ Management Board shall organize the compensation for ground clearance according to the general regulations in order to assign or lease land areas already cleared with clearance compensations to investors. The assignment and lease of land and/or water surface to each specific project shall be decided by the Chu Lai OEZ Management Board on the basis of the project’s demands, regardless of its size. The Chu Lai OEZ Management Board shall uniformly manage and be responsible for the efficient use of the already assigned land and water surface.

Domestic individuals and economic organizations shall be assigned or leased land, foreign organizations and individuals shall be leased land for execution of their investment projects.

Article 21.- Land rent rates shall be decided by the Chu Lai OEZ Management Board for each project and each period, suitable to realities and ensuring the investment encouragement on the basis of the rent rate bracket prescribed by the State.

To experimentally conduct land use right auctions or project biddings which involve land use right in the assignment or lease of land in Chu Lai OEZ to investors.

Article 22.- Companies involving in the development of infrastructure in Chu Lai OEZ, which are permitted by the Chu Lai OEZ Management Board to build and manage public works, provide infrastructure-related services, transfer land use right and sublease land to enterprises, shall only have to register their land use purposes with the Chu Lai OEZ Management Board.

Land use right transfer and land sublease prices shall comply with the market mechanism.

Article 23.- Enterprises and organizations in Chu Lai OEZ, before building works, shall have to compile dossiers to apply for the permission of the Chu Lai OEZ Management Board. The Chu Lai OEZ Management Board shall issue permitting decisions within 7 days after receiving the complete and valid dossiers.

The management of construction projects in Chu Lai OEZ shall comply with the State’s regulations.

Chapter V

FINANCIAL, LABOR, BUSINESS ORGANIZATION, EXIT, ENTRY, RESIDENCE, INFORMATION AND COMMUNICATIONS REGIMES

Article 24.-

1. Foreigners and overseas Vietnamese who carry out market research and prepare for investment, work or conduct investment and business activities in Chu Lai OEZ and their family members shall be granted multiple exit-entry visas with valid duration compatible with their working terms or duration of investment in Chu Lai OEZ.

2. The residence and temporary residence in Chu Lai OEZ shall comply with the regulations of Quang Nam province’s Police Department.

3. The Ministry of Public Security shall guide Quang Nam province’s Police Department in implementing the above provisions.

Article 25.- The purchase, sale, payment, transfer and other transactions among economic organizations and individuals in the non-tariff area shall be allowed to be effected in freely convertible currencies through bank accounts. The ordinary goods purchase and sale in service of daily life may be paid in Vietnam dong.

Article 26.-

1. Banks operating in the non-tariff area may open foreign exchange counters according to the current regulations.

2. Goods transported out of or into the non-tariff area must all be valued in foreign currency(ies); assorted charges paid to State management agencies in Chu Lai OEZ shall all be calculated in Vietnam dong, while other charges shall be calculated in either foreign currency(ies) or Vietnam dong.

Chapter VI

STATE MANAGEMENT OVER CHU LAI OEZ

Article 27.- The Chu Lai OEZ Management Board shall be established under the Prime Minister’s decision to perform the concentrated and unified management over the fields of investment and economic development in Chu Lai OEZ.

The Chu Lai OEZ Management Board is a State management agency having the legal person status, a seal bearing the national emblem, its payroll and operating fund allocated from the State budget, and acts as a planning unit with its capital construction fund separately allocated from the State budget.

The head of the Chu Lai OEZ Management Board shall be appointed by the Prime Minister. The deputy heads shall be appointed by the president of the People’s Committee of Quang Nam province.

The ministries of Trade, Defense, Public Security, Construction, Finance, the Planning and Investment, Natural Resources and Environment, Vietnam Administration of Tourism and the concerned agencies shall coordinate with the People’s Committee of Quang Nam in authorizing and guiding the Chu Lai OEZ Management Board to effect the one-door and on-the-spot management mechanism in an effective manner.

Article 28.- The Chu Lai OEZ Management Board shall perform the tasks and exercise the powers prescribed for the provincial-level industrial park management boards and border-gate economic zone management boards, and observe the provisions of this Regulation.

The Chu Lai OEZ Management Board has the following tasks and powers:

1. To formulate the general planning and the operation regulation of Chu Lai OEZ for the People’s Committee of Quang Nam province to submit them to the Prime Minister for approval; to work out detailed planning for the People’s Committee of Quang Nam province to submit to the Ministry of Construction for approval; to disseminate, guide and inspect the implementation of the general planning, detailed planning and operation regulation.

2. To draw up the list of investment projects and annual plans on capital construction investment, and submit them to the competent agencies for approval and organize the implementation thereof.

3. To grant business registration certificates, investment licenses, investment preference certificates, certificates of goods origin in Chu Lai OEZ as well as other certificates under the authorization by competent State agencies.

4. To assign or lease land and/or water surface to investors for the execution of investment projects.

5. To elaborate and submit price and fee rate brackets to the competent agency(ies) for consideration and promulgation for application in Chu Lai OEZ.

6. To act as a body in prime charge of settling problems arising in the course of formulation, deployment and execution of investment projects, business and operation in Chu Lai OEZ.

7. To coordinate with the local administration and the concerned agencies in ensuring that all activities in Chu Lai OEZ comply with this Regulation and the Operation Regulation of Chu Lai OEZ.

8. To perform the task of managing and using the budget revenue sources reinvested in Chu Lai OEZ strictly according to regulations; to manage construction projects funded with investment capital from the State budget in Chu Lai OEZ.

9. To organize, deploy, introduce and negotiate on investment promotion at home and abroad.

Article 29.- The State budget shall provide infrastructure investment supports for Chu Lai OEZ in proportion to revenue amounts collected in Chu Lai OEZ, as follows:

a/ 100% of revenue amounts to be collected in 10 years after the establishment decision is issued;

b/ 50% of revenue amounts to be collected in the period from the 11th year to 20th year;

c/ From the 21st year onward, the general regulations shall apply.

The Chu Lai OEZ Management Board is allowed to use the land fund to create capital for infrastructure development.

The Chu Lai OEZ Management Board is allowed to issue project bonds at home to mobilize investment capital beyond the limited level prescribed for the capital mobilization by Quang Nam province.

The Chu Lai OEZ Management Board is allowed to collect charge or fee for the use of infrastructural works and public facilities in Chu Lai OEZ.

Article 30.- The People’s Committee of Quang Nam province have the responsibility to:

1. Direct the formulation of the general planning and operation regulation of Chu Lai OEZ to be submitted to the Prime Minister for approval; direct the elaboration of detailed planning to be submitted to the Ministry of Construction for approval; manage projects in strict compliance with the approved planning and authorize the Chu Lai OEZ Management Board to approve domestic investment projects under its competence; approve the list of development investment projects and annual plans on capital construction investment in Chu Lai OEZ.

2. Decide on the exemption or reduction of land rent and expenditure support for laborer training in Chu Lai OEZ.

3. Coordinate with the concerned ministries and branches in organizing the management of Chu Lai OEZ.

4. Direct and create conditions for the Chu Lai OEZ Management Board to fully perform the tasks prescribed in this Regulation.

5. Direct the People’s Committees of Tam Ky provincial capital and Nui Thanh district to carry out the ground clearance and the province’s functional agencies to coordinate with the Chu Lai OEZ Management Board in applying measures to ensure social security, order and safety and create favorable conditions for enterprises of Chu Lai OEZ to operate.

Article 31.- The ministries and branches shall perform the function of State management over Chu Lai OEZ and authorize the Chu Lai OEZ Management Board to perform the functions and tasks within the ambit of its competence in the domains of investment, construction, planning, management of natural resources and environment, urban management and development, land management, labor management, export and import as well as some other domains according to the provisions of law and the provisions of this Regulation.

For domains not decentralized or authorized to the Chu Lai OEZ Management Board, the ministries, branches and the People’s Committee of Quang Nam province shall perform the function of State management over Chu Lai OEZ by organizing their attached units in Chu Lai OEZ to perform their tasks and exercise their powers, with a view to creating favorable conditions for operations of investors and enterprises in Chu Lai OEZ.

Article 32.- The customs office of Chu Lai OEZ shall supervise and manage goods circulated between the non-tariff area and foreign countries and goods circulated between the non-tariff area and the other areas in the Vietnamese territory.

Chapter VII

IMPLEMENTATION PROVISIONS

Article 33.- Other provisions related to activities of organizations and individuals in Chu Lai OEZ not prescribed in this Regulation shall comply with the corresponding provisions of the Commercial Law, the Law on Foreign Investment in Vietnam, the Law on Domestic Investment Promotion, the Law on Enterprises, the Land Law, other legal documents and international treaties which Vietnam has signed or acceded to.

Article 34.- Preferences given to enterprises operating in Chu Lai OEZ according to this Regulation shall be permitted to apply to enterprises licensed to operate in the area of Chu Lai OEZ before the date of promulgation of this Regulation.

When new and more preferential mechanisms or policies are promulgated, they shall be applied to Chu Lai OEZ.

Prime Minister
PHAN VAN KHAI